Judge rules state retiree insurance premiums can proceed

State government retirees will begin paying premiums for their state health insurance beginning Monday as scheduled, but the money will be left untouched in a new state account. A Sangamon County judge made the ruling Friday in a lawsuit that sought to prevent the state from deducting the health insurance premiums from retiree pension checks.

State government retirees will begin paying premiums for their state health insurance beginning Monday as scheduled, but the money will be left untouched in a new state account.

Sangamon County Associate Circuit Judge Steven Nardulli made the ruling Friday in a lawsuit that sought to prevent the state from deducting the health insurance premiums from retiree pension checks. As an alternative, the lawsuit asked that the money be held in escrow until the state Supreme Court determines if the health insurance premiums are an unconstitutional diminishment of pension benefits.

Nardulli declined to halt the premium deductions. However, he said he was concerned retirees might have to go to the state Court of Claims to recover their money if the Supreme Court rules the state cannot charge the premiums.

“The notion that as a retiree I’d be forced to go to through the Court of Claims to me is just wrong,” Nardulli said.

By keeping the premium money in a separate account, it could be returned if necessary without retirees filing an action with the Court of Claims.

Under a labor agreement reached between the state and the American Federation of State, County and Municipal Employees, retirees will begin paying premiums for their state-subsidized health insurance July 1. Retirees who are also covered by Medicare will pay 1 percent of their pension benefits. Retirees not covered by Medicare will pay 2 percent.

Previously, state workers who retired with 20 or more years on the job were entitled to premium-free health insurance from the state. Last year, the General Assembly passed a law authorizing the state to begin charging premiums from all state retirees who still receive state health benefits.

Nardulli previously ruled in a separate lawsuit that health insurance benefits are separate from pension benefits and that the state could begin charging premiums. That ruling is being appealed to the Supreme Court.

Attorneys told Nardulli Friday they believe the Supreme Court will take up the appeal during its September session.

Springfield attorneys Don Craven and John Myers filed the lawsuit that was heard Friday on behalf of non-union state retirees. It said the state’s plan to deduct the insurance premiums from pension checks amounted to an unconstitutional diminishment of pension benefits. They asked that the deductions be stopped or the money held in a special account.